Israel on strike? Deal with it tomorrow

TEL AVIV (MarketWatch) – Try, for a moment, to imagine that the Federal Reserve System might not be able to report the consumer-credit figures. Or issue enforcement actions against an unruly bank. Or announce the minutes of the most recent meeting of the Federal Reserve Board. And all because Fed staff called a strike.Well, Israel found itself in something like that situation after Bank of Israel staff called a strike at midday on Monday. Everything from processing of foreign-currency deposits to clearing the financial side of Tel Aviv Stock Exchange trades to filling up the automatic teller machines stopped getting done. The strike was postponed on Thursday, with the workers and government set to negotiate.Mind you, it wasn’t the only job action this week. Teachers in the secondary schools and staff at the National Insurance Institute were striking. There was a job action at Ashdod port, just south of Tel Aviv. Some airport workers called a slowdown. Students at Tel Aviv University were upset over tuition.But the one that’s received the most attention is at the Bank of Israel, where the workers have been trying for four years to reach a new labor agreement with the Finance Ministry. Bank of Israel Governor Stanley Fischer was widely reported to have threatened to resign.Fischer, 63, is one of the world’s pre-eminent economic personalities, and came to this country specifically to bring his expertise, contacts and financial common sense to bear on an economy that can always use all three. Fischer joined the Israel central bank from Citigroup, where he was vice chairman. He is also a former first deputy managing director at the International Monetary Fund.It’s unimportant whether Fischer actually threatened to quit – fluent Hebrew-speaker that he is, he probably did not need to use those words. The government realizes how valuable he is, and as dense as Israel’s administrators can be, they know that the last thing a man of Fischer’s stature needs is to have his reputation spattered by a labor dispute.Also put aside the question of whether public-sector staff should strike: That’s not at issue here.What the dispute points up is that Israel’s public sector has an unfortunate and annoying habit of not addressing acute problems until the last minute. That’s at odds with the country’s technology companies, which have adopted western attitudes and approaches to operations and efficiency.Delay, what delay?This tendency to put off decision making permeates the society from critical matters of policy to the most niggling, but nonetheless infuriating, events.At the one end, it means the Finance Ministry ought to have been negotiating with the workers it hired in good faith and in a timely manner. At the micro end, consumers get justifiably impatient when postal or ministry managers seem to intentionally ignore the fact that the one or two service lanes that are open are snaking across the office.Uriel Lynn, the president of the Israel Federation of Chambers of Commerce, said in a statement this week:”We are creating a norm by which new labor agreements are reached through the pressure of strikes and job actions. Workers in the public sector, and particularly in essential services, will learn that this is the most efficient way to obtain improved wages, and this will lead to further public-sector strikes and job actions.”The flip side of his remarks: if the government had dealt with the Bank of Israel workers four years ago, ATMs here wouldn’t have been gradually running out of cash this week.Whence this shirking of responsibility from the public sector and basic services?For one thing, Israel is a stressful society, owing to its political situation, high cost of living, impatient population, and more. Any psychologist will tell you that people respond to stress by avoiding the source of that stress. Going head-to-head with union representatives made grouchy by four years of waiting is certainly stressful. See more global markets coverage.People also say the country’s socialist roots are a factor. Time was that no one had to take responsibility for what did or didn’t happen because no one could be sanctioned. Competition was an alien concept: If you wanted a phone, the government-controlled Bezeq would get you one – within, say, a year of your request. (Now Bezeq is private and the country has four providers of mobile phones. You can get connected via landline or mobile right quick.)Another point: The voters still don’t firmly demand accountability from their representatives. (The word “accountability,” which requires both an acceptance of responsibility and a willingness to explain, still hasn’t yet been translated into Hebrew.) A seat in Israel’s parliament or at the Cabinet table brings a substantial salary and perquisites, but somehow the voters are slow to stand up and demand that their representatives say why they did what they did, and demand they resign if it was done poorly.And the country is simply young: 60 years is a tick on history’s clock, and Israel’s public institutions and mores simply haven’t matured.”Israel is a high-tech shtetl,” says Amotz Asa-El, journalist, author and longtime commentator on Israeli society. The word is the Yiddish reference to the small Eastern European towns in which Jews lived during the 19th century.”The shtetl was inherently suspicious, scornful and hostile toward power,” an approach that grew out of the Jews’ abuse by both the czars and the common folk,” he says.After independence, “suddenly the Jews, who had been conditioned to counteract power, had to be power. Power in turn demanded building a state and [having people respect] it. This has not yet been [fully] accomplished.”And within the government itself, “you need execution and resolution,” Asa-El says. “Apparently this never dawned” on the Finance Ministry.But investors should take heart from the way the country’s business side has rejected the “we’ll deal with it tomorrow” approach and embraced efficiency and flexibility.”When you look at industry and commerce in Israel, there’s a different attitude toward planning and discipline than there is in government,” says Asa-El, who is a columnist for and former executive editor of the Jerusalem Post.For one example, “At a company like Teva Pharmaceutical, the work culture is western,” with fast thinking and flexibility and speed in execution, “while the company retains unique Israeli advantages,” Asa-El says.For now, Israelis can only hope that the government catches up to the private sector. They may wait a long time. End of StoryRobert Daniel is MarketWatch’s Middle East bureau chief, based in Tel Aviv.This article was provided by MarketWatch from Dow Jones. The original version of the article can be found here on the MarketWatch Web site.